Friday, December 28, 2012

No one spent more money trying to
influence California politics during last year’s election season than the
billionaire Munger siblings, Molly and Charles Jr., the children of Charles
Munger Sr., who has provided them piles of money he made as the business
partner of famed investor Warren Buffett.

Molly spent just short of $45 million
on a failed attempt to raise taxes on almost all Californians to benefit public
schools from kindergarten through high school.

Meanwhile, the $37 million put out by
Charles Jr., a physicist at the Stanford Linear Accelerator Center south of San
Francisco, went toward efforts to defeat Gov. Brown’s relatively modest tax
increase proposition and to push for the latest incarnation of the
three-time-loser “paycheck protection” plan aimed at reducing the political
power of workers and their unions.

But Charles Munger Jr. was also active
on the intimidation front. This effort demonstrated a gross disregard for the
future ability of Californians to challenge initiatives and other laws.

It stemmed from Munger’s 2010
investment in Proposition 14, which established the “top two” primary election
system that last fall produced numerous runoff races matching members of the
same parties.

Minor political parties considered
themselves the prime victims of the new system, whose hope it was (still is) to
put more moderates into state offices and break some of the partisan deadlocks
that often afflict California and the nation.

Top two cost minor parties like the
Libertarians, Greens, American Independent and Peace and Freedom their usual spots
on the November ballot. Of course, their members had the same opportunities to
run and to present their ideas as anyone else during the primary. None advanced
to a runoff.

Rather than going back to the drawing
board and devising ways to develop more mass appeal, they and their supporters
sued the state. Enter Munger, as an intervenor. He contended state Attorney
General Kamala Harris and Secretary of State Debra Bowen were not equipped to
defend Proposition 14 on their own. This was entirely his choice.

Munger, as usual, spent big, hiring a
prominent, politically-connected law firm with offices in Sacramento and Marin
County to make his case.

When the plaintiffs, led by
69-year-old minor-party advocate Richard Winger, longtime publisher of the Ballot
Access News blog, lost the case, Munger insisted they be dunned for his legal
fees. A San Francisco Superior Court judge assessed Winger and his fellow
plaintiffs $243,000, of which Winger is liable for one-fifth as things now
stand. He says paying that sum would just about break him and likely put his
blog out of business.

It’s clear Munger doesn’t need the
money. It’s also clear he wants no mere citizen activists to interfere with any
of his future efforts. Keep the world safe for billionaires, seems to be his
motive. His lawyers have refused to answer questions on why they’re intent on
collecting from people exponentially less wealthy than Munger.

But Winger and his fellow plaintiffs
are not meekly accepting the trial judge’s assessment. They’ve appealed to the
state Court of Appeals and they may have a better shot at winning there than
they did in the late October hearing where that judge denied them so much as a
re-hearing on the issues of the fees.

While their lawsuit was pursued by the
private practitioner attorney Gautam Dutta of Hayward, the appeal has been
picked up on a pro bono basis by Andrew Byrnes, a partner in the large
international law firm of Covington and Burling, who has considerable
experience in election law and some clout of his own: He’s co-chair of the
finance committee of the state Democratic Party.

Since the junior Munger has been most
active over the years on behalf of Republican-backed measures, this can now be
seen in a political context, with a major behind-the-scenes Democrat moving
against a GOP moneybag.

Like Munger’s attorneys, Byrnes says
little about the appeal.

But most large law firms don’t expend
unpaid time of their partners on cases they deem insignificant. So it’s clear
Covington and Burling agrees with those who see Munger’s insisting on
collecting what is a pittance to him but an enormous sum to those who might
have to pay as an attempt to intimidate future possible plaintiffs from
challenging any of his upcoming efforts.

Whether or not you agree with Winger
and friends that top two should go (and this column has frequently disagreed
with them), it’s clear the large fee assessment does not serve the overall
public interest. The more that can be done to overturn it and make the world a
little more uncertain for billionaires, the better.

-30- Email Thomas Elias at
tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising
Cancer Treatment and the Government’s Campaign to Squelch It," is now
available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net.

Six months after pulling back about
$12 million worth of grants to help build refueling stations for the hydrogen
fuel cell cars due to debut by 2017, the California Energy Commission is ready
to take applications for new grants.

The problem: Revised rules issued by the commission appear at
first glance to cut out the favoritism that sullied last spring's stymied
grants, but the new rules still seem likely to place all or almost all the
money in the same hands that would have received the cancelled grants. They
also encourage a modicum of pollution over completely clean air.

The grants commissioners tried to dole out last spring required
prior approval for any prospective refueling location from at least one of the
eight big carmakers that will produce the first hydrogen cars.

Oddly enough, all but one station
approved by those billion-dollar-plus corporations – Mercedes Benz, Nissan,
General Motors, Toyota, Honda, Chrysler, Volkswagen and Hyundai – would have
belonged to two other huge international companies, German-based Linde Group
and Pennsylvania-based Air Products & Chemicals Co.

The Energy Commission only pulled back
its millions after this column exposed the fact that smaller operators were
systematically excluded, including some that proposed making H2 fuel from water
– almost the ultimate in pollution-free renewable energy.

The money has been lying around ever
since, and now the commission is about to accept applications for new grants
using the same funds, plus more, for a total of about $28.5 million. It all
comes from the state vehicle license tax.

That date, for example, is no problem
for the two big industrial gas suppliers who, like the car companies and the
Energy Commission are members of the California Fuel Cell Partnership
organization, where membership costs almost $90,000 per year. They have
sufficient staff to complete complex documentation quickly for every service
station to which they’d like to add a hydrogen pump or two. But smaller firms
reported they had difficulty getting staff to work on those applications
through the holiday period.

“A Feb. 17 deadline date would be much
more fair to small companies like ours that will sell purely renewable
hydrogen,” said Paul Staples, president and project director for Eureka-based
Hygen Industries. “They can still reset that due date.”

The new plan also names new areas for the refueling stations,
while eliminating other places targeted in previous versions, another advantage
to big companies with multiple operatives to recruit service station owners.

Because at least one large company
signed up a few stations in the new areas several weeks before those locations
showed up in any commission documents, there’s also a possibility commission
insiders tipped off outfits they favor for the grants.

The Energy Commission has also changed
the amount it plans to reimburse builders of the new hydrogen stations, without
which no one would likely buy fuel cell cars, no matter how efficient they are
or how they look and perform. Where grants were once intended to fund 70
percent of building costs, that figure is down to 65 percent in the newest
filing and a 5 percent bonus for completing projects within 18 months of
approval has disappeared from the plan.

The reimbursement difference won’t
hurt the big fellas much, but makes it tougher for smaller guys to compete.

The new plan also requires state
approval for any loans a company takes out to build a station, and gives state
government veto power over any subsequent station sale.

“That is unacceptable,” says Staples.
“Lack of outright ownership makes it harder for small businesses to attract
venture capital and project investment.”

Taken together, the rules the Energy
Commission seeks to impose would apparently assure most control of hydrogen
refueling by the same companies on whom the commission originally planned to
bestow almost all its grant money.

One way to sum this up is to say that,
as the apocryphal Mr. Dooley observed more than 100 years ago, “The more things
change, the more they stays the same.”

Another way to say it: Stymie state
bureaucrats in their efforts to favor their cronies one way and they’ll try to
find another way to give the same money to the same people and companies.
Devilish details, indeed.

The bottom line: While the newest plan
on its face looks like a big improvement over the one abandoned last spring, it
still favors the same big companies and their fossil-fuel derived H2 over
outfits wanting to use the cleanest form of hydrogen fuel.

-30-

Email Thomas Elias at tdelias@aol.com. His book,
"The Burzynski Breakthrough: The Most Promising Cancer Treatment and the
Government’s Campaign to Squelch It," is now available in a soft cover
fourth edition. For more Elias columns, visit www.californiafocus.net

Sunday, December 23, 2012

Calls for change by the Republican
Party – especially its California branch – came from all sides in the days
immediately following President Obama’s reelection last fall.

But don’t expect that to go anywhere
fast. For this is a party that values its core principles and predilections
more than it does victory.

As early as 1993, when California was
just one year into its shift from being a Republican mainstay to becoming
reliably Democratic in presidential elections, the GOP was warned that it
needed to change its stances on immigration amnesty, gun control, birth control
and abortion, equal pay for women and many others.

The GOP is now generally supportive of
equal pay for women. But it has not changed much on anything else. Nor is that
likely, despite the fact that some of the change-oriented advice it has lately
received comes from its most conservative members.

Take Ted Cruz, the newly-elected Tea
Party-sponsored Republican U.S. senator from the GOP bastion of Texas, where no
Democrat has won statewide office since the 1990s.

“If Republicans do not do better in
the Hispanic community, in a few short years Republicans will no longer be the
majority in our state,” Cruz told a reporter. “If that happens, no Republican
will ever again win the White House. New York and California are for the
foreseeable future unalterably Democrat. If Texas turns bright blue, the
Electoral College math is simple…the Republican Party would cease to exist. We
would become like the Whig Party.”

So Cruz implies he might compromise on
some things. But many other conservative Republicans remain defiant of the need
to change. Here’s what newly-reelected GOP Congressman John Campbell of Orange
County wrote just days after the election:

“I’ll be damned if this member of
Congress is going…to go along with a slow move towards socialism rather than a
fast one. This game is not over!”

There it is: Almost anything that rubs
conservative Republicans wrong, they tend to label socialist. But is allowing
women to make their own reproductive decisions socialist, or is it
fundamentally libertarian? Is gun control socialist -- especially in the wake
of the rampage in Newtown, Conn.? And so on.

Even the Republicans in the state
Legislature, now less than a one-third minority, are being warned not to sell
their souls or betray their “no new taxes” pledges.

“Voting for Democratic bills would be
like taking a torch to the city of Rome,” wrote Jon Fleischman, publisher of
the conservative Flash Report blog and former executive director of the state
GOP. “It’s just a bad idea.”

What’s more, Republicans are looking
at November's national results and seeing that they control governorships and
both legislative houses in 23 states, while Democrats have the same one-party
rule in just 14 – although the Democrats’ 14 have far more population than the Republicans’
23.

But Republicans regained control of
the Wisconsin state Senate, lost temporarily to them via several recall
elections last summer.

Those kinds of offices are viewed by
national parties as a sort of “farm team” that can often produce future
candidates for the U.S. Senate or House. Republicans are doing just fine there,
which makes many feel that fundamental change is not needed.

“Our strength is in the states,”
trumpeted Grover Norquist, author of the no-new-taxes pledge signed by most GOP
candidates. He suggests that’s where the GOP will try to enact its anti-union,
anti-teacher tenure goals, ideas that did not fly in California, where the
anti-union Proposition 32 lost handily last fall. The first state moving on
this post-election was Michigan, once a union bastion.

But the party must change, and
especially on immigration, suggests new information from the America’s Voice
pro-immigration amnesty lobby. “While the Latino electorate’s disconnect from
the current Republican Party runs deeper than immigration alone, it will be
impossible for the GOP to get a hearing on its other issues unless and until
they work to pass immigration reform,” said Frank Sharry, the group’s director.
“Continued obstructionism on immigration would threaten the party’s future,
especially when reliably red states like Texas and Arizona would go the way of
California (as their large Latino populace becomes more politically active).”

The Tea Party, which ran a couple of
longtime Republican U.S. senators out of office last year via GOP primary
elections, remains unwilling to accept anything like that.

“The presidential loss was not on us,
but on the country club establishment and Beltway elites,” said Jenny Beth
Martin, a Tea Party leader.

Put it all together and real change
will almost certainly elude the GOP both nationally and in California over the
next two years. Expecting change, even though the GOP now has sunk below the 30
percent level among California registered voters, is as realistic as expecting
a dog to quack.

-30-

Email Thomas Elias at tdelias@aol.com. His book, "The
Burzynski Breakthrough: The Most Promising Cancer Treatment and the
Government’s Campaign to Squelch It," is now available in a soft cover
fourth edition. For more Elias columns, visit www.californiafocus.net

Dr. Norman Carter and his wife Kathleen are not alone, and a
lawsuit they are fighting now in San Bernardino County Superior Court might
help hundreds of other Californians who also believe they’ve been scammed by
companies selling what lawyers often call “junk health insurance.”

Carter, 63, an independent
orthodontist practicing in Chino since 1976, and his dental hygienist wife
bought their $400-per-month individual policy from Mid-West National Life
Insurance Co. of Tennessee in 2004, switching over from Blue Cross, which they
believed was becoming too expensive. Besides their practices, both also taught
at Loma Linda University.

Like many of the self-employed, all
they wanted was comprehensive hospitalization coverage in case of a major
illness. A high deductible was fine with them, so long as the lifetime cap on
expenses was at least $1 million.

But, their lawsuit charges, what they
bought into was a fraud. For their policy contained ambiguous language that set
a limit of $18,000 for miscellaneous hospital expenses. When crunch-time
arrived for the Carters, their suit charges, Mid-West used that that language
to classify almost anything done in a hospital as miscellaneous. The Carters
contend they weren’t told this could happen when a Mid-West agent sold them the
policy.

Their lawsuit contends that when
Kathleen Carter, also 63, needed surgery and chemotherapy for primary
peritoneal cancer in early 2011, Mid-West paid only about $30,000 out of almost
$200,000 in bills, the couple today still owing Loma Linda more than $140,000.

The suit says Mid-West accomplished
this mostly with that “miscellaneous” tag. Among doctor-prescribed items placed
under this label were $49,660 in operating room charges, $28,300 for anesthesia
used during an eight-hour surgery and $24,381 in prescription drugs.

The Carter’s lawyer, Claremont-based
William Shernoff, calls this a combination of fraud, breach of contract and
“breach of the covenant of good faith and fair dealing.” His action does not
seek a specific amount of damages, instead asking a jury to penalize Mid-West
and its parent company, Texas-based HealthMarkets Inc., enough to discourage
them and other insurance companies from doing anything similar.

For sure, it takes a huge penalty to
discourage the type of scam alleged here. As recently as 2008, HealthMarkets
(owned mostly by the New York-based Blackstone Group and the Goldman Sachs
investment bank) agreed to a $20 million settlement with insurance regulators
in an action begun by the Massachusetts attorney general. Three years later,
the firm was forced to pay another $350,000 in penalties.

HealthMarkets, Mid-West Life and two
sister companies are also now being sued by the Los Angeles city attorney for
“unlawful, unfair and fraudulent” insurance sales and advertising. Among other
claims, the city’s lawsuit says HealthMarkets’ agents were deliberately trained
to defraud customers by not explaining all the limits on their policies.

How widespread is this type of
practice? The state Department of Insurance reports it received more than 100
complaints about Mid-West Life from policy holders who claimed their legitimate
claims were denied or massively reduced. And that’s just from one company.
Several others – the department wouldn’t name them – supposedly perform similarly.

HealthMarkets refused either to
comment on the lawsuit or to say how many policies it writes in California,
saying that information is private. But it reported collecting $73.6 million in
premiums here last year. If the Carters’ premiums are close to typical, that
would mean somewhere between 10,000 and 15,000 California individuals and
families have such “coverage.”

“These companies used to do this even
more than they do now,” said Shernoff, whose firm has won hundreds of millions
of dollars in settlements from insurance firms. “But once they paid that $20
million fine and were also banned for a year from selling policies in
Massachusetts, they improved a little.”

Shernoff said he has settled 10 cases similar to the Carters’ in
the last five years and estimates there were hundreds of instances like the
theirs in California during that time.

No one knows if this will all end when
the state health insurance exchange created under the federal Affordable Health
Care Act, better known as Obamacare, begins operating in 2014.

“We can’t speculate on that,” says
insurance department spokesman Byron Tucker. “We don’t yet know what companies
will sell insurance there and we don’t know how they’ll be regulated and which
ones will be eligible.”

All of which means this remains a
classic case of “caveat emptor” – let the buyer beware. If an insurance agent
won’t answer every question asked, if a policy is written so ambiguously it
might allow an insurer to weasel out of most reasonable and customary expenses,
it’s probably best to seek elsewhere for coverage.

-30-
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski
Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign
to Squelch It," is now available in a soft cover fourth edition. For more
Elias columns, go to www.californiafocus.net

About Me

Thomas Elias writes the syndicated California Focus column, appearing twice weekly in 93 newspapers around California, with circulation over 2.2 million.
He has won numerous awards from organizations like the National Headliners Club, the California Newspaper Publishers Association, the Greater Los Angeles Press Club, and the California Taxpayers Association. He has been nominated three times for the Pulitzer Prize in distinguished commentary.
Elias is the author of two books, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It" (now in its third edition; also published in Japanese and recently optioned for a television movie) and "The Simpson Trial in Black and White," co-authored with the late Dennis Schatzman.